TREASURIES-Risk-on sentiment, Fed speakers push yields higher

(Recasts, updates yields, adds analyst comments, elevated bill yields, and upcoming auctions) By Karen Pierog CHICAGO, Dec 2 (Reuters) - U.S. Treasury yields headed higher on Thursday as investors returned to riskier assets and Federal Reserve officials talked up a quicker end to the central bank's bond purchases. The benchmark 10-year yield, which had fallen to as low as 1.409% earlier in the session, was last 2 basis points higher at 1.4545%. Yields move inversely to prices. The 30-year yield was last less than a basis point lower at 1.7711%. Earlier in the session, it tumbled to its lowest level since January at 1.737%, benefiting from a flight-to-quality trade sparked by concerns about the impact of the Omicron COVID-19 variant. The two-year yield rose to a one-week high of 0.63%. It was last up 5.6 basis points at 0.6186%. Wall Street, meanwhile, headed higher with the S&P 500 up about 1.5%. "You've got a little bit of a movement back into risk assets, but more importantly you have Fed speakers on the tape reinforcing the faster taper message," said Jim Vogel, interest rate strategist at FHN Financial in Memphis, Tennessee. "Everyone in the market is reading tea leaves that a faster taper improves the odds, if not guarantees the odds, that we're going to see a first-half hike based on what we know now," he added. Federal Reserve Bank of Atlanta President Raphael Bostic told the Reuters Next conference on Thursday it would be appropriate to conclude the tapering of the central bank's bond-buying program by the end of the first quarter of 2022. He also said if inflation continues to run as high as 4% through next year, that would present a good case for pulling forward interest rate hikes and raising them more than once through the course of 2022. San Francisco Fed President Mary Daly said it might be time to start crafting a plan for raising interest rates to address above-target inflation. A rates outlook released by BofA Global Research on Thursday pegged the 10-year yield at 1.75% in 2022's first quarter, rising to 2% in the fourth quarter. Meanwhile, some Treasury bills due this month were trading at elevated yields on fears the U.S. government could run out of money in as soon as two weeks. On Friday, all eyes will be on the U.S. government's employment report. According to a Reuters survey of economists, non-farm payrolls probably increased by 550,000 jobs in November after rising 531,000 in October. The unemployment rate is forecast dipping to 4.5% from 4.6% in October. Ahead of the data, the ADP National Employment Report on Wednesday showed private payrolls increased by 534,000 last month, while the Labor Department reported on Thursday that initial claims for state unemployment benefits rose 28,000 to a seasonally adjusted 222,000 for the week ended Nov. 27. "With the ADP number, the claims number, the employment story seems to be intact and pretty solid, so (the jobs report) would have to be something that either is aggressively stronger or weaker to derail that narrative," said Tony Rodriguez, head of fixed income strategy at Nuveen. Yield curves flattened with the closely watched gap between two-year and 10-year note yields at its narrowest in 11 months. It was last down about a basis point at 83.80 basis points. The five-year note and 30-year bond yield curve was last 4.90 basis points narrower at 55.40 basis points. The U.S. Treasury on Thursday announced auctions next week for $54 billion of three-year notes, $36 billion of 10-year notes, and $22 billion of 30-year bonds. December 2 Thursday 13:08PM New York / 1808 GMT Price Current Net Yield % Change (bps) Three-month bills 0.0525 0.0532 -0.003 Six-month bills 0.09 0.0913 -0.013 Two-year note 99-196/256 0.6186 0.056 Three-year note 99-144/256 0.9006 0.065 Five-year note 100-42/256 1.216 0.061 Seven-year note 100-174/256 1.3976 0.044 10-year note 99-68/256 1.4545 0.020 20-year bond 102-104/256 1.8551 0.004 30-year bond 102-104/256 1.7711 -0.007 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 23.00 -0.50 spread U.S. 3-year dollar swap 22.25 -0.50 spread U.S. 5-year dollar swap 10.75 -0.50 spread U.S. 10-year dollar swap 7.00 0.00 spread U.S. 30-year dollar swap -16.00 0.00 spread (Reporting by Karen Pierog, Tom Westbrook and Yoruk Bahceli; Editing by Devika Syamnath, Angus MacSwan and Susan Fenton)